ECB Raises Rates to 2.5 Percent as Energy Inflation Surges

The European Central Bank raised its key interest rates by 25 basis points on September 10, lifting the deposit facility rate from 2.25 percent to 2.5 percent, its second increase this year and its highest level since early 2025. The main refinancing rate rose to 2.65 percent and the marginal lending rate to 2.90 percent, with the new levels taking effect on September 16. The Governing Council, meeting in Berlin during one of its periodic trips away from Frankfurt, voted unanimously, and the move had been widely expected by financial markets. The decision responds to an energy shock triggered by renewed fighting between the United States and Iran and disruption to shipping through the Strait of Hormuz. Eurozone annual inflation climbed to 3.3 percent in August from 2.9 percent in July, according to a Eurostat flash estimate, with energy prices up 14.3 percent year on year. Brent crude climbed back above 100 dollars a barrel this week, with some reports citing levels above 105 dollars, while European gas prices reached multi-year highs.